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Beyond copper, what?

Policies for Productivity Growth in Chile

Chile has a long tradition supporting trade and integration with a low tariff rate, more than a dozen free trade agreements and a relevant experience giving concessions to port authorities, which has brought to the country a wave of modernization to its port infrastructure. However, if Chile would like to capture more benefits derived from international trade, and particularly from participation in global value chains, the country must work on a series of aspects related to each of these areas.

This was the main message from the presentation made by the Integration and Trade Sector of the Inter-American Development Bank (IDB) on April 23rd in the trade session of the seminar: “Beyond Copper, what? Policies for Productivity Growth in Chile”. The seminar was co-organized by the IDB, the OECD and the government of Chile with presentations from various organizations including the IDB and the OECD. INT Senior Economist, Juan Blyde, talked in front of an audience that included representatives of the private sector, the academia and the new government, where he highlighted some of the priorities to move forward. For example, regarding the area of transportation/logistics, the priority is to increase the efficiency of the logistics system prior to shipment. Blyde mentioned the importance of deepening the single window initiative (SICEX) that became operational in 2013, since the current challenge is to incorporate in the single window not only the public agencies in charge of authorizing the trade transactions but also other participants of the logistics chain, like the port operators and the transport/logistics companies. This would reduce even further the time and the costs of making international transactions.

In the area of trade agreements, Blyde made reference to “the multiplicity of rules of origin in the various agreements that Chile has signed and the relatively restrictive levels associated to them. This represents a challenge for companies seeking to participate in international value chains spanning various countries.” In this sense, Blyde mentioned that in the negotiations currently in place (Pacific Alliance and Trans-Pacific Partnership) it would be desirable to have flexible rules of origin or at least mechanisms to evaluate them in the future.

Blyde also mentioned “the opportunities that the offshoring of services represents for Chile. Since most of these services can be delivered electronically, the remoteness of the country should not be a binding constraint.” However, he emphasized that “Chile has a relatively small pool of human capital in this sector, in part because the supply of skills delivered by the educational system does not always match the demand from the private sector.” Blyde stressed the necessity to support training programs that better connect the curriculum design with the demand of the industry.

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